Sales people are generally interested in marketing strategies, which will draw the attention of potential buyers and increase sales. The seller is interested in maximizing profit, whereas the buyers are interested in minimizing cost.
An auction is a marketing game wherein the item price is set according to the price the participants are willing to pay. Generally, the larger the audience the more likely the price will be high. Many methods of getting together large audiences without physically bringing the people together have been used over the past years. One method is by broadcasting the auction on television, for example on a sales channel and accepting bids live by telephone. A second method is by publicizing the items in a newspaper and accepting bids by telephone until a selected time. A third method is by conducting the auction on the Internet, for example as implemented by Ebay (www.ebay.com).
In some cases, the auction organizers charge a fee from the seller and/or bidder and/or charge a percentage of the closing deal to cover organization costs.
In an auction method suggested by Max Price Ltd. (www.maxprice.co.il), the organizers charge a fee from the bidders and use some of the fee to subsidize the item price for the buyer offering the winning bid. In Max Price the buyer is offered an item at up to 20% or less of its list price. The buyer who gives the highest bid up to the maximum price (up to 20% or less of the list price) wins the item on condition that no other bidder offered the same price. Duplicate bids are canceled and do not participate.
Another auction method called the upside-down auction similarly subsidizes the item for a winning bid. In the upside-down auction the items are offered at a minimal price which is equal to the Israeli VAT (value added tax) of the item list price (17 or 18% of the list price). In the upside down auction the lowest non-duplicate bid wins the item at the bid price.
In Max Price and upside-down auction the games attempt to reduce the price for the buyer while not damaging the profit of the seller. Generally the actual sale price is very close to the maximal price of Max Price and/or the minimal price of Min Price since a difference of 100.00 in the price represents 10,000 different bid values. In most cases the number of bids allowed for an item before closing bidding on the item is less than this value, therefore the bids generally deviate only by a small percent from the selected price.